Capitalism is undergoing a crisis of confidence. Today's companies take the blame for many of society's economic, social, and environmental ills, despite the launch of countless corporate social responsibility initiatives in recent decades. Now more than ever, in the midst of a global economic crisis that has weakened the ability of governments and NGOs to meet complex social challenges, it is time to restore public confidence through a redefined vision of capitalism with all the potential to meet the social needs.
From philanthropy to corporate social responsibility, sustainability and shared value, the way companies describe their social initiatives can involve very different methods and approaches.
What is shared value?
Shared value is created when companies recognize that there are enormous opportunities for innovation and growth in treating social problems as business objectives.
The evolution of shared value
In the early 2000s, when FSG began helping large corporations think about their philanthropic strategies, it was realized that they could have a much greater impact on social issues through their business practices than through their charitable donations. So they began to think of ways to incorporate their entire range of assets (their experience, knowledge and influence) into their philanthropic activity.
This led to collaboration with Harvard Business School Professor Michael Porter on "The Competitive Advantage of Corporate Philanthropy" (Porter, 2002). Under Professor Porter's leadership, the relationship between a company's success and social and environmental conditions in the regions where it operated was further explored. These perceptions led to a focus on interdependence, rather than friction and tension, between business and society.
Working together, Porter, Mark Kramer and their FSG colleagues, and long-term client FSG, Nestlé articulated the concept of shared value. FSG's consulting work with many clients over the years helped refine the concept, and in 2011, Porter and Kramer published “Creating Shared Value” (Porter & Kramer, 2011) in the Harvard Business Review.
The article attracted international attention and, along with the work of other thought leaders, contributed to a real shift in managerial thinking about the importance of social issues in corporate strategy. To support this change, FSG launched the Shared Value Initiative, a global community of leaders who find business opportunities to meet the challenges of society. FSG continues to expand the concept of shared value through the work of developing, implementing and measuring shared value strategies for the main corporate clients in the Americas, Europe, Asia and Africa.
The Solution: Create Shared Value
The next transformation in business thinking lies in the principle of shared value: creating economic value in a way that also creates value for society by responding to its needs and challenges.
What is shared value then?
Corporate policies and practices that enhance the competitive advantage and profitability of the company, while advancing social and economic conditions in the communities in which it sells and operates. Shared value is not corporate social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success.
Why are shared values important?
Creating and implementing shared values is important to all organizations as they provide guidance for organizational decision making and also provide a kind of ethical compass for organizational action.
Shared values are organizational values that are usually developed by the organization's leadership and then adopted by the other members of the organization. Values are shared and followed by all members of the organization when acting on behalf of the organization. They can also be called core values.
Bibliography
Porter, M. (2002). The competitive advantage of corporate philanthropy. Harvard Business School.
Porter, M., & Kramer. (2011). Creating shared value. Harvard Business Review.
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